Cemex 2013 Annual Report Download - page 80

Notes to the consolidated financial statements
AsofDecember31,2013,thediscountratesusedbyCEMEXinitscashowsprojectionschangedslightlyfromthevaluesdeterminedin
2012,ineachcase,mainlyasaresultofvariationsinthecountryspecicsovereignyieldascomparedtotheprioryear.Inrespecttolong-
termgrowthrates,followinggeneralpracticeunderIFRS,beginningin2012,CEMEXstartedtheuseofcountryspecicrates,whichare
mainlyobtainedfromtheConsensusEconomics,acompilationofanalysts’forecastworldwide,orfromtheInternationalMonetaryFundwhen
therstarenotavailableforaspeciccountry.
InconnectionwithCEMEX’sassumptionsincludedinthetableabove,CEMEXmadesensitivityanalysestochangesinassumptions,affecting
thevalueinuseofallgroupsofCGUswithanindependentreasonablepossibleincreaseof1%inthepre-taxdiscountrate,andanindependent
possibledecreaseof1%inthelong-termgrowthrate.Inaddition,CEMEXperformedcross-checkanalysesforreasonablenessofitsresults
usingmultiplesofOperatingEBITDA.Inordertoarriveatthesemultiples,whichrepresentareasonablenesscheckofCEMEX’sdiscounted
cashowmodel,CEMEXdeterminedaweightedaverageofmultiplesofOperatingEBITDAtoenterprisevalueobservedintheindustry.The
averagemultiplewasthenappliedtoastabilizedamountofOperatingEBITDAandtheresultwascomparedtothecorrespondingcarrying
amountforeachgroupofCGUstowhichgoodwillhasbeenallocated.AsofDecember31,2013and2012,CEMEXconsideredanindustry
weightedaverageOperatingEBITDAmultipleofapproximately10.3times,inbothperiods.CEMEX’sownOperatingEBITDAmultipleasof
thesamedateswas11.6timesin2013and10.6timesin2012.ThelowestmultipleobservedinCEMEX’sbenchmarkasofDecember31,
2013and2012was7.2times,inbothperiods,andthehighestbeing20.9timesand21.3times,respectively.
AsofDecember31,2013,noneofCEMEX’ssensitivityanalysesresultedinarelativeimpairmentriskinCEMEX´soperatingsegments.Asof
December31,2012,theimpairmentchargesresultingfromthesensitivityanalysesthatwouldhaveresultedfromanindependentchange
ofeachoneofthevariablesand/orbytheuseofmultiplesofOperatingEBITDA,regardingtheoperatingsegmentthatpresentedarelative
impairmentrisk,wouldhavebeenasfollows:
As of December 31, 2012 Sensitivity analysis of described change in assumptions
Recognized impairment Discount rate Long-term Multiples of
(Amounts in millions) charges + 1pt growth rate - 1pt Operating EBITDA
Spain  U.S.$ – 99 – 39
UnitedArabEmirates  – 8 – –
Nonetheless,CEMEXwillcontinuetomonitortheevolutionofthespecicCGUstowhichgoodwillhasbeenallocatedthathavepresented
relativegoodwillimpairmentriskinanyofthereportedperiodsand,intheeventthattherelevanteconomicvariablesandtherelatedcash
owsprojectionswouldbenegativelyaffected,itmayresultinagoodwillimpairmentlossinthefuture.
CEMEXmaintainsamarketcapitalizationsignicantlylowerthanitslevelspriortothe2008globalcrisis,whichCEMEXbelievesisdueto
factorssuchas:a)thecontractionoftheglobalconstructionindustryandmainlyintheUnitedStates,whichhasexperiencedacontinued
slowrecoveryafterthecrisisof 2008,that hassignicantlyaffectedCEMEX’s operations insuch countryand consequentlyitsoverall
generationofcashows;b)CEMEX’ssignicantamountofconsolidateddebtandits operationsinceAugust2009undertheFinancing
AgreementasrenancedbytheFacilitiesAgreement(note16A),hasalsosignicantlyaffectedCEMEX’svaluation,consideringthehigh
uncertaintyperceivedbystakeholdersregardingCEMEX’soddsofsuccessfullyachievingthedifferentmilestonesestablishedwithitsmain
creditors;andc)thetransferofcapitalduringthelastfewyears,mainlyduetohighvolatilitygeneratedbycontinuedliquidityproblemsin
certainEuropeancountries,fromvariableincomesecuritiesindevelopingcountriessuchasMexicotoxedincomesecuritiesindeveloped
countriessuchastheUnitedStates.ThemarketpriceofCEMEX’sCPOhasrecoveredsignicantlyafterCEMEXenteringintotheFacilities
AgreementinSeptember2012.Indollarterms,CEMEX’smarketcapitalizationincreasedbyapproximately91%in2012comparedto2011,
toapproximatelyUS$10.8billion($138.5billion),andfurtherincreasedapproximately25%in2013comparedto2012toapproximately
US$13.5billion($176.1billion).
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